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United States v. Casa De Maryland

United States District Court, D. Maryland

October 2, 2018

CASA DE MARYLAND, et al., Defendants.


          Paula Xinis United States District Judge

         Pending before the Court in this qui tam action is the Motion to Dismiss the Amended Complaint filed by Defendants CASA de Maryland, CASA in Action, Gustavo Torres, and Virginia Kase (collectively, “Defendants” or “CASA”). ECF No. 27. Also pending is the Motion for Reconsideration filed by Plaintiff-Relator Amalia Potter. ECF No. 24. The matters are fully briefed, and no hearing is necessary. See D. Md. Loc. R. 105.6. Upon consideration of the parties' arguments, the Court GRANTS Defendants' motion and DENIES Plaintiff's motion.

         I. Background

         This case was the subject of the Court's prior Memorandum Opinion and Order, so the Court will not repeat the matters previously discussed in detail. See ECF Nos. 22, 23.

         Potter maintains that her former employer, CASA de Maryland, Inc. and its affiliate, CASA in Action, Inc., violated the False Claims Act (“FCA”) by certifying that CASA had complied with all “applicable” laws and regulations in connection with federal grant monies it received, even though CASA had not fully and properly completed I-9 employment verification forms for all of its employees. Potter specifically alleges that CASA made false claims to the Government during an audit triggered by CASA's receipt of Government funds (the “A-133 Audit”), and in grant-related documents called Program Participation Assurances (“PPAs”) and Financial Status Reports (“FSPs”), in which CASA certified that it had complied with “applicable” laws, regulations, and grant provisions governing the programs under which CASA received Government funding. When Potter tried to address the deficient I-9 forms with CASA, she faced resistance and then was fired.

         In its prior Memorandum Opinion, the Court dismissed Potter's substantive FCA and FCA conspiracy claims because Potter failed to aver facts to support a plausible inference that CASA falsely represented or omitted information to the Government relating to incomplete or deficient I-9 forms, or that such false representations or omissions would have been material to the Government's decision whether to grant funding to CASA. ECF No. 22 at 6-13. The Court also dismissed Potter's FCA retaliation claim because at best, the Complaint showed that CASA knew about Potter's concerns regarding I-9 compliance, but the Complaint did not include sufficient facts to support the objective reasonableness of Potter's view that CASA was violating the FCA, or that CASA was on notice of FCA-protected activity. ECF No. 22 at 15-18.

         The Court granted Potter leave to amend her Complaint to cure the pleading deficiencies identified in her FCA claims. The Court particularly noted that the Complaint was bereft of any facts showing that CASA made any materially false statements or material omissions regarding I-9 employee verifications in the A-133 Audit, in PPAs, or in FSPs, and directed Potter to amend the Complaint to add such facts, if possible. Potter was also directed to provide additional facts related to her allegedly protected conduct sufficient to make out a retaliation claim. The Court dismissed Potter's state-law wrongful termination claim with prejudice.

         Potter has now amended her Complaint, but adds no facts regarding representations or omissions made to the Government during the A-133 Audit, in PPAs, or in FSPs, related to the completion of I-9 forms. Nor has Potter included any facts to show how the claimed I-9 deficiencies were material to the Government's decision to pay CASA federal grant monies. Rather, Potter's new factual allegations concern the circumstances under which she discovered CASA's I-9 noncompliance and how she confirmed her suspicion that CASA's methods for addressing deficient I-9 forms contravened other legal requirements. Potter also provides further detail about her communications with CASA regarding the proper way to correct employees' I-9 forms. See ECF No. 25 ¶¶ 61, 62, 66, 68, 69, 70, 73, 74, 78.

         Defendants move to dismiss the Amended Complaint, arguing that Potter's amendments did not cure the deficiencies identified by the Court. See generally ECF No. 27. In response, Potter contends that because an A-133 Audit requires review of employee I-9 forms and the I-9 forms were not properly completed, any CASA certifications regarding compliance with the A-133 Audit requirements must have been false. ECF No. 28-1 at 7.[1] Potter contends that the I-9 forms necessarily were material to the Government's decision to grant funding because the A-133 Audit includes a review of I-9s. ECF No. 28-1 at 8. Potter also argues that her Amended Complaint sufficiently supports her contention that she was engaged in FCA-protected conduct and terminated because of that conduct. ECF No. 28-1 at 8-11. Separately, Potter moves the Court to alter or amend the dismissal with prejudice of her wrongful discharge claim (Count IV of her initial Complaint), arguing that she was indeed terminated for her refusal to amend the I-9s in a manner which would constitute a crime. See ECF No. 24.

         The Court discusses each motion in turn. For the reasons that follow, the Court will grant Defendants' motion to dismiss, and deny Potter's motion for reconsideration.

         II. Motion to Dismiss

          When reviewing a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6), the Court must determine whether the complaint includes facts sufficient to state a claim to relief that is plausible on its face. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007); Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). A plaintiff must plead facts to support each element of the claim to satisfy the standard. See McCleary-Evans v. Maryland Dep't of Transp., State Highway Admin., 780 F.3d 582, 585 (4th Cir. 2015). In so assessing, the Court takes as true all well-pleaded factual allegations and makes all reasonable inferences in the plaintiff's favor. Philips v. Pitt Cty. Mem. Hosp., 572 F.3d 176, 180 (4th Cir. 2009). The Court does not credit conclusory statements or legal conclusions, even when couched as allegations of fact. See Iqbal, 556 U.S. 678-79; Giarratano v. Johnson, 521 F.3d 298, 302 (4th Cir. 2008). Actions brought under the FCA must “state with particularity the circumstances constituting fraud or mistake.” Fed.R.Civ.P. 9(b); see U.S. ex rel. Nathan v. Takeda Pharm. N. Am., Inc., 707 F.3d 451, 456 (4th Cir. 2013).

         In deciding a motion brought under Rule 12(b)(6), the Court generally may not consider extrinsic evidence. However, the Court may consider any documents attached to a motion to dismiss if they are “integral to and explicitly relied on in the complaint, ” and authenticity is not challenged. Am. Chiropractic Ass'n v. Trigon Healthcare, Inc., 367 F.3d 212, 234 (4th Cir. 2004); see also Philips, 572 F.3d at 180; Walker v. S.W.I.F.T. SCRL, 517 F.Supp.2d 801, 806 (E.D. Va. 2007) (“[W]here a complaint in a fraud action references a document containing the alleged material misrepresentations, the referenced document may be considered part of the complaint.”). This rule seeks to prevent a “situation in which a plaintiff is able to maintain a claim of fraud by extracting an isolated statement from a document . . . even though if the statement were examined in the full context of the document, it would be clear that the statement was not fraudulent.” Am. Chiropractic Ass'n, 367 F.3d at 234 (internal marks and citation omitted).

         A. Substantive FCA Violation (Count I) and Conspiracy to ...

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